Natural rubber prices, already at record levels, may rise further in the first half of the year as major producing countries enter the low-output wintering season and low interest rates push liquidity into commodities markets, the International Rubber Consortium's acting Chief Executive said Friday.
Even with robust supply-demand fundamentals, natural rubber prices are now higher than warranted, Yium Tavarolit said ahead of an industry event.
"The root problem is too much cheap money," Yium said. He declined to give a price forecast.
He said low borrowing costs in some countries are prompting speculation, pushing rubber futures to their current highs.
Benchmark July rubber on the Tokyo Commodity Exchange hit a record of Y516 a kilogram in Thursday's night session. The market is closed for a public holiday Friday.
Rubber prices have also been boosted by adverse weather curbing output, even as demand rises due to the global economic recovery.
Yium said the three IRCo member countries didn't meet their production quota last year due to unfavorable weather.
Thailand, Indonesia and Malaysia produce 70% of global rubber output.
(Source: http://www.irco.biz/BlogMoreDetial.php?id=2726&ShowContent=news)
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